In May 2024, the Taskforce on Inequality and Social-related Financial Disclosures ('TISFD') launched its website and published a policy on its activities, including the topics it will cover, the relationship with existing standards and The TISFD has also published a policy statement on its activities, including the topics it will cover in the future, the relationship with existing standards, and the documents it plans to publish. This paper describes the TISFD's published activity policy.

Background and overview of the establishment of TISFD

TISFD is a global initiative to develop recommendations for companies and investors to identify, assess and report inequality and social-related risks, opportunities and impacts. Inequality is a key social issue of our time, and income inequality creates social cleavages. Climate change and loss of nature also exacerbate inequality, with serious consequences for poor and marginalised communities.

　While the actions of companies and investors have a significant impact on society and the economy, the impact on inequality, and even the consequences of inequality, is not clear The aim of the TISFD is to enhance financial disclosure on inequality and social issues and to help companies and investors to identify, assess and manage financial risks and impacts and to assist companies and investors to identify, assess and manage their financial risks and impacts.

For more information on the background to the establishment of TISFD, see.Previous articlefor more information.

Basic activity policy

The TISFD has a specific action policy (final version) together with an overview document.TISFD Proposed Scope and Mandate('the Basic Policy') and seeks widespread feedback. The Basic Policy consists of seven components.

1. theme.

The TISFD approaches social and inequality-related issues (the complementarities that exist between a company's responsibility to respect human rights, reducing inequality, improving people's wellbeing and investing in human and social capital) in an integrated and coherent way.

To enable such an approach, a conceptual basis needs to be defined that identifies the relationship between impacts and dependencies on people and the associated risks and opportunities.

The conceptual basis should include articulating the different themes, topics and dimensions that constitute people's conditions, the different stakeholders affected and inequalities, and should also reflect the deep interconnections between social and inequality-related issues, as well as tackling climate change and nature-related risks.

The TISFD's approach to social and inequality-related issues does not mean that disclosure recommendations address all social issues in isolation, but prioritises disclosure recommendations on social and inequality-related risks, opportunities and impacts that are generally relevant, widespread or significant to users of the information Treatment.

2. materiality approach

∙ Given that different standard setters and regulators adopt different materiality perspectives, develop interoperable disclosure recommendations from the impact materiality perspective and the financial materiality perspective. On the other hand, where feasible, distinguish between these.

In order to also consider materiality in relation to inequality, the impact of organisations, the accumulation of inequality and the system-level financial impact on firms, investors, markets and financial stability will also be evidenced.

3. Relationship with existing international principles, etc.

∙ Considering additional frameworks and guidance on managing significant financial risks, including systemic risk of inequality (and related opportunities), and managing corporate and investor exposure to inequality, consistent with the TISFD disclosure framework and global standards. .

Develop a clear evidence base on the relationship between impacts on people, inequalities and financially significant risks, and assess whether there is sufficient guidance on the identification, assessment and management of impacts and risks.

4. Relationship with existing standards, etc.

The TISFD needs to work to ensure that it does not promote inequality in the process concerned, and the participation of civil society, labour organisations and marginalised groups in the composition, deliberations and decisions of the Task Force is as important as that of investors and businesses.

... analyse the content of existing reporting standards and frameworks and make a decision on which indicators and metrics to include in the TISFD disclosure framework.

The TISFD will maintain the approach adopted by the TCFD and TNFD to address inequality and social-related issues, while ensuring that international standards of conduct (UN Guiding Principles on Business and Human Rights, OECD Guidelines for Multinational Enterprises) on the impact of business and finance on people are appropriately reflect them and ensure consistency of content. Also identify how impacts on social issues can lead to financial risks, particularly system-level risks such as inequality.

The TISFD disclosure recommendations, together with disclosure recommendations on climate and nature-related issues, provide a tool to promote fair transition efforts, thus ensuring that risks and impacts related to climate, nature, society and inequality are addressed in a consistent and complementary manner.

The TISFD needs to work to ensure that it does not promote inequality in the process concerned, and the participation of civil society, labour organisations and marginalised groups in the composition, deliberations and decisions of the Task Force is as important as that of investors and businesses. ...

5. Material to be published

1	Global Disclosure Framework	Global framework with disclosure recommendations and related guidance.
2	Conceptual basis and definitions	Framework for understanding social and inequality-related concepts and their interrelationships
3	Evidence base on impact and risk pathways.	Collection of material on the impact of companies and investors on people and inequality, related individual risks and system-level risks related to inequality and social-related issues.
4	Guidance on metrics, indicators and data	Guidance on decision-useful metrics in reporting inequality and social-related impacts, dependencies, risks and opportunities.
5	Guidance on thresholds and targets	Guidance on thresholds and targets for reporting inequality and social-related impacts, dependencies, risks and opportunities.
6	Guidance on identification and evaluation	Guidance on identifying and assessing key inequality and social-related impacts, dependencies, risks and opportunities.
7	Capacity building resources	Support materials for affected stakeholders (companies, investors, policy makers, trade unions, civil society organisations and a wide range of audiences including workers and rural and indigenous communities) to use the TISFD disclosure framework and recommendations.

6. Intended outcomes and impact

The ultimate goals of the Disclosure Framework are to reduce short-, medium- and long-term financial risks, strengthen financial stability and resilience, improve macro-level economic outcomes, respect people's human rights and enhance human development and welfare, and to achieve this, the TISFD will focus on the following outcomes

1) Strengthen the ability of businesses and financial institutions to understand their impacts and dependencies on people and to identify, measure, manage and disclose inequality and social-related impacts and associated financial risks and opportunities.

2) Financial institutions recognise inequality as a system-level risk (an often overlooked opportunity in terms of gains from reducing inequality), understand the overall impact of their investees and their own activities on inequality and build this understanding into their financial risk assessment, capital allocation and pricing, engagement with investees and investment structures.

3) Standard-setting bodies and policymakers incorporate TISFD recommendations into reporting standards and legislation to promote global harmonisation.

4) Benchmark and assessment providers improve the accuracy and relevance of socially relevant benchmarks and assessments.

5) The capacity of civic organisations to pursue how companies and financial institutions address inequality and social-related issues.

6) Develop effective policies and strategies for governments, financial supervisors and macroprudential authorities to use disclosed information to protect society and the financial system.

7. Indicator gaps and weaknesses

While existing standards contain useful disclosure indicators and metrics, the need for decision-useful indicators and metrics on social and inequality-related impacts, dependencies, risks and opportunities for companies and investors is still recognised as a need.

Future schedule.

The TISFD is accepting feedback on the documents published in conjunction with the launch of the website (including the overview documents and draft basic policy) until 1 August 2024. The TISFD will then publish its response to the feedback when it is officially launched, which is scheduled for September 2024.

At the end.

The published TISFD approach identifies social and inequality-related impacts, dependencies, risks and opportunities in accordance with the UNGPs, ILO and OECD, with reference to existing sustainability disclosure standards (e.g. ESRS, GRI) and interoperating with existing frameworks (e.g. TCFD and TNFD). It is required to do this. In light of this, it is possible that areas of the value chain, such as the company's workforce, supply chain, local communities and customers, may require disclosure of social and inequality-related indicators. First of all, it will be necessary to sort out the risks and relevance of your business to the people positioned in the relevant value chain.

aiESG can provide support on the TISFD and related frameworks, from the basics to the actual disclosure of non-financial information. companies that need help with the social aspects of ESG disclosure are encouraged to contact us.

Enquiry:
https://aiesg.co.jp/contact/


Links to reference information (external website)
TISFD
TISFD - Technical consultation on proposed scope and mandate (FINAL)


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